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Case Study On Toyota

Toyota Motor Corporation is the largest automobile manufacturer in the world, with a 10.24% global market share in 2019. Due to declining sales in North America from 2017-2018, Toyota increased marketing spending but hurt profits. As a result, Toyota reorganized with two new divisions - Vehicle Development and Zero-Emissions Vehicles, aiming to address changing consumer preferences and climate change. Toyota also restructured existing divisions and hired new board members to integrate innovation with efficient production practices and maintain its leading market position.

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46 views

Case Study On Toyota

Toyota Motor Corporation is the largest automobile manufacturer in the world, with a 10.24% global market share in 2019. Due to declining sales in North America from 2017-2018, Toyota increased marketing spending but hurt profits. As a result, Toyota reorganized with two new divisions - Vehicle Development and Zero-Emissions Vehicles, aiming to address changing consumer preferences and climate change. Toyota also restructured existing divisions and hired new board members to integrate innovation with efficient production practices and maintain its leading market position.

Uploaded by

Chad Fernin
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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TOYOTA MOTOR CORPORATION

Toyota Motor Corporation (TMC), a Japanese-based car manufacturer founded in 1933, is now
considered one of the largest automobile manufacturer in the world. Among the automotive market, TMC
has led the competition since 2008, after surpassing General Motors. In 2019, Toyota owned 10.24% of the
global automotive market share, only to be followed by Volkswagen with only a 7.59% share.

The Toyota led the automotive industry by its Toyota Production System (TMS), a system that
emphasizes production efficiency. The discovery of this manufacturing system has led the company to be
followed by different other firms, not limited to automotive companies, but even throughout various
manufacturing firms, to such extent that the TMS has become one of the pillars to what has been known as
the Lean Manufacturing.

a.

In order to take advantage of the TMS, Toyota has operated through a structure, which separates
the business to which the top management delegates responsibility for day-to-day operations & strategies
to division managers. By applying such structure, the company has created an efficient system of resource
allocation, and a systemic functional hierarchy with autonomy, further improving the operation’s
efficiency.

b.

However, despite being the globe’s top manufacturer of automotive products, TMC has shown a
declining sales volume trend, especially in the North American region from the years 2017-2018, and such
trend was foreseen to continue in the financial year 2019. As a result of this analysis, TMC has initially
increased its marketing and incentive spending especially within the North American Region in order to
maintain its current market position. However, this only resulted to a blow towards the operating margins
of the company.

c.

As a result of this pressure, TMC announced several changes within its structure. It was primarily
aimed to innovate its overall business model. To achieve such feat, the firm made decisions on changing
the responsibilities of operating officers, as well as the responsibilities of senior professionals. Alongside
this, the company also made changes within its organizational structure, such as adding a Vehicle
Development Center and a dedicated Zero-Emissions Vehicle (ZEV) Division.

The ZEV division was initially introduced as a result of the changing consumer preferences in the
aforementioned decline in performance. The responsibilities of the ZEV division would primarily be
related to the business strategy planning for Battery Electric Vehicles (BEVs) and Fuel Cell Electric
Vehicles (FCEVs), all in order to address the environment-friendly-vehicle demands of the consumers as a
result of the awareness towards Climate Change.

Furthermore, the Vehicle Development Center was introduced as a means of moving towards
sustainable growth. This is added to the organizational structure as a means to hone its manufacturing
abilities in the real world and to strengthen the competitiveness of its products from the viewpoint of its
customers, complementary to the initial introduction of the ZEV Factory.

Alongside these two new additions to the firm, TMC also reorganized their existing divisions, in
order for these 2 new fields in the company to fit in with the current organization, as well as to further
improve the company’s efficiency in operations.
d.

Alongside the organizational restructuring, the firm also decided to hire new Audit and
Supervisory Board Members as an initiative to introduce new ideas within the organization. Furthermore,
by noticing consumer preferences, TMC also continued the increase of its marketing and incentive
spending despite the initial loss it had shown in the recent years, in hope of showing improvement through
listening towards its customers.

e.

These changes have clearly shown movements towards creating competitive advantages with the
TMC. Through the ZEV and Vehicle Development Center, TMC has chosen innovation as a means of
competitive advantage against its rivals. TMC has slowly made the automotive industry gradually move
towards a fast-cycle market, especially throughout developed countries such as USA. Furthermore, by
reorganizing the existing divisions, this innovation capability of TMC has become integrated by the
existing capability of the company of being efficient with its Toyota Production System.

f.

Overall, the organizational structure of TMC has barely changed, in such that it still retained its
overall hierarchy being a multidivisional structure. Its changes were only done as a means of addressing its
current insufficiencies towards the changing needs of its customers. As a result, the introduction of the two
new divisions have only made TMC more flexible towards customer changes, as well as become more
efficient as well as innovative, relative to its competitors. Through these changes, it has been clear that
Toyota have showed positive results, by maintaining its position as the leading automotive product
manufacturer globally, with its current market share of 10.24% in 2019.

Sources:

https://www.statista.com/statistics/316786/global-market-share-of-the-leading-automakers/
(Market Share)
https://www.britannica.com/topic/Toyota-Motor-Corporation
(TMC info)

B.
https://www.forbes.com/sites/greatspeculations/2018/05/24/why-has-toyotas-north-american-operation-
remained-weak/#793017897348
C.
https://global.toyota/en/newsroom/corporate/28495921.html ^

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